Legislature(1995 - 1996)
02/18/1995 01:07 PM Senate HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SHES - 2/18/95
SB 70 PUBLIC SCHOOL FOUNDATION PROGRAM
Number 002
CHAIRMAN GREEN called the work session for Senate Health, Education
and Social Services (HESS) Committee to order at 1:07 p.m. She
introduced SB 70 as the only order of business for the work
session.
JERRY BURNETT, staff to Senator Randy Phillips, explained that
SB 70 is a vehicle for providing maximum equity in the foundation
formula. Mr. Burnett highlighted the changes encompassed in SB 70:
(1) SB 70 would replace the area cost differential, currently in
statute, with the Alaska school price index which would be defined
in regulation by the Department of Education.
(2) SB 70 would increase the required local match to the lesser of
4 mills or 50 percent from its current 4 mills or 35 percent. Mr.
Burnett noted that there are currently only three school districts
who pay less than 4 mills at the 35 percent level and they would
pay more local taxes as a result.
(3) SB 70 defines the funding community to include no less than 16
students in average daily membership. Currently, approximately 35
funding communities have less than 16 students which would result
in some loss of funding for those communities. He suggested that
an alternative service delivery system could be used in those
areas.
(4) SB 70 recognizes overcrowding in the larger elementary schools
and therefore, changes the divisor in the elementary school formula
from 17 to 16 for schools having more than 525 in average daily
membership. This change would effect most of the larger schools
and would increase their funding.
(5) Section 7 of SB 70 would provide for additional funding for
single site schools who are not currently acknowledged in the
formula as needing additional funding. Each year single site
schools are added to the funding bill by the legislature which has
caused much grief in the past.
Number 102
CHAIRMAN GREEN asked if SB 70 addresses how average daily
attendance is determined. JERRY BURNETT said that SB 70 does not
address that other than the change in the timing of the student
counts within the school district.
WANDA COOKSEY, representing Single Site School Districts, informed
everyone that there are 21 single site school districts in Alaska
with about 6,000 students which add up to be 39 percent of the
school districts. There has been inequity in the funding of single
site schools since the foundation formula was written. Every year
single site schools come before the legislature to request for
funding. She clarified that in the past three legislative
sessions, single site schools have received grant funding in the
same amount as requested in the proposed formula by these schools.
The proposed formula would allow a single funding community to be
considered a school district.
CHAIRMAN GREEN asked if Ms. Cooksey felt this would be an equitable
solution for single site districts. WANDA COOKSEY explained that
the proposed formula for single sites addresses the same percentage
as the consortium, with the exception that SB 70 would recognize
this problem in schools of average daily membership (ADM) of 900 or
fewer, up from the consortiums ADM of 800 or fewer.
SENATOR SALO referred to Section 3 of SB 70 when inquiring as to
how much revenue would be generated with the change from 35 percent
to 50 percent. JERRY BURNETT stated that it would generate
approximately $3.5 million per year. In response, to Senator Salo,
Mr. Burnett said that the potential closure of 35 schools with less
than 15 students would generate approximately $4,169,000 in revenue
next year.
SENATOR SALO asked if the change in Section 5 from 10 to 5 percent
of the instructional unit was addressing the Wrangell situation.
JERRY BURNETT explained that this change was originally proposed to
address the situation in Sitka last year, however, the change would
allow a hold harmless situation for some of the smaller schools who
lost funding communities under Section 4. Senator Salo clarified
that the change would provide a phase out period for small
population schools that would no longer be funded.
Number 201
SENATOR SALO inquired as to the cost of the change in the
elementary divisor. JERRY BURNETT said that it is estimated at
$11.7 million for 1996 fiscal year.
SENATOR SALO asked when the school price index was developed.
JERRY BURNETT explained that the school price index would go into
effect in the 1997 fiscal year. He clarified that the reference to
1999 on the last line of page 4 of SB 70 referred to the first
adjustment in the school price index. Mr. Burnett, speaking for
the sponsor, said that the school price index figures would be
similar to the ones developed by the Department of Education.
SENATOR SALO asked if Senator Randy Phillips would be interested in
changing the school price index in 1996. JERRY BURNETT said that
he could not speak to that issue.
LARRY WIGET, Director of Government Relations for the Anchorage
School District, stated that the Anchorage School Board adopted the
rewriting of the foundation formula as one of its top legislative
priorities. Currently, Anchorage composes 40 percent of Alaska's
student population while the district receives 30 percent of the
funding. The rewrite of the formula would address the actual needs
of larger districts. He supported the change in the elementary
divisor, the secondary divisor, and full funding of the Alaska
School for the Deaf. To operate the School for the Deaf costs the
district $755,000 more than they receive in funding. He indicated
the possibility of increasing the foundation unit. He urged the
legislature and the governor to rewrite the formula in an equitable
manner.
Number 270
GEORGE MAYKOWSKI, Superintendent of Schools of the Copper River
School District, explained the many goals and programs that the
school districts have been working towards in order to improve
instructional delivery to students. There has been much success in
these goals and programs which now will face funding cuts. He felt
that the time to review the delivery of fiscal support was once a
plan or goal was achieved. He noted that his district faces the
possibility of laying off employees, especially those hired to
achieve the goals the legislature had previously urged. He stated
that his district faces a possible $100,000 deficit next year in
order to maintain the status quo. SB 70 has a lot of unknowns. In
conclusion, Mr. Maykowski suggested that the educational system
should achieve some of the goals before them and then evaluate the
system.
BRAD BRINGGOLD, parent, asked how SB 70 would effect the overall
amount of funding for education. JERRY BURNETT said that SB 70
would increase the total amount spent on education by an estimated
$9 million. Mr. Burnett was not aware of any way in which SB 70
would change the state's commitment to funding good education.
Number 343
DAVID DOSSETT, Southeast Island School District Superintendent,
supported the Alaska school price index. He expressed concern with
the minimum of 16 students required for a funding site. Of the 12
schools in the Southeast Island School District one school already
faces closure at the current requirements. The new minimum
requirements in SB 70 would close four other schools and leave two
schools in a borderline situation.
Mr. Dossett explained that most of the schools in this district are
located in either fishing or logging communities. He did not
understand how the state could spend lots of money funding Alaska
2000 and then force students to use alternative delivery systems in
order to save money. The state funds the creation of new
communities and then lets them become ghost towns or retirement
communities when the schools are closed. He said that the logging
communities and schools are small due to federal restrictions on
the industry and state education cuts would hurt these areas. He
urged the committee to keep the economic impact of this new minimum
requirement in mind; closing schools with less than 16 students
will ultimately cost the state.
BRUCE STANTON, teacher and parent, stated that he was angry about
the state of education. He pointed out that there is no
inflationary adjustment in education funding; Ketchikan will
receive a $6 per student increase in ten years while inflation has
risen by 40 percent. Mr. Stanton reviewed the American Chamber of
Commerce Research Association's cost of living statistics for
cities in Alaska. He stated that Anchorage was 29.6 percent above
the national average of the cost of living while Ketchikan was 56.2
percent above the national average; Anchorage should not have the
same area cost differential as Ketchikan. He noted that Ketchikan
has reached their local cap for years and now the cap will be
reduced from 20 percent of basic need to 19 percent.
Mr. Stanton asserted that fixing the problems of education will
require spending. SB 70 is a good place to begin the solution.
He suggested that if the state does not recognize inflation then
the local communities should be allowed to contribute more. He
offered his help in finding a solution to this problem.
Number 444
MIKE HARPOLD, Board of Education member for the Ketchikan Gateway
School, appreciated the introduction of SB 70. He stated that the
Ketchikan Gateway Borough fully funds education to the present cap.
He pointed out that this district will have to absorb increased
costs due to increased inflation while the local contribution will
be decreased by 4 percent due to federal regulations. In order for
the Ketchikan Gateway Board of Education to achieve a balanced
budget, they must cut revenue by an additional $706,000 over what
they are currently attempting to cut. He noted that last year the
board cut music, library, and physical education programs in
elementary schools by 50 percent. He reviewed the change in the
instructional unit and the replacement of the area differential
with the school price index. He pointed out that cost disparities
hurt laws requiring equal education across the state. He said that
if there is no change in the application of the formula, then the
instructional unit value would need to be increased by $2,050 to
$63,050 in order for the Ketchikan Gateway district to fund next
year's programs at the same level as this year.
CHAIRMAN GREEN pointed out that any individuals interested in
offering written suggestions or comments on the foundation formula
issue are welcomed to do so.
SCOTT STERLING inquired as to how the overall increase of spending
on education of $9 million would be calculated. JERRY BURNETT
explained that various sections of SB 70 decrease and increase the
total amount of funding, but the change in the elementary divisor
results in the most significant increase. That portion increases
total funding by $11.7 million. Mr. Burnett pointed out that the
Mat-Su district, with the new elementary divisor, should have an
increase of approximately $800,000.
MELINDA BROOKS, parent and member of the Mat-Su School District
Budget Advisory Commission, stated that the commission has given
her a look at the possibility of tremendous losses in education.
CHAIRMAN GREEN noted that SB 70 was intended as a starting point in
dealing with the funding of education.
MIKE MURPHY, representing the Nome Board of Education, supported
some portions of SB 70 such as the inclusion of the single site
school issue. He commented that everyone wants to provide a
quality education for Alaska's children, but difficulties arise
when districts are fighting for funding to operate. He expressed
concern with the school price index because it has not been
defined. Depending upon which price index formula is used, Nome
could face a difference in funding from $400,000 to $1.2 million.
He reiterated the need to rewrite the foundation formula. He
stated that inflation is the biggest problem with the foundation
formula. If the foundation formula had kept up with inflation then
the funding unit would be approximately $76,000 in today's dollars.
He said that the rewrite of the formula will not work without
addressing inflation.
CHAIRMAN GREEN noted that Duane Guiley would be giving another
presentation explaining the foundation formula.
HARRY ROGERS, Superintendent for Valdez, noted that fair and
equitable seemed to mean when a group received more money. He
expressed concern that the changes encompassed in SB 70 seem to
move funding from the rural areas to the urban areas; there is not
a lot of money added to the formula. Any minor changes in SB 70
could have tremendous ramifications, especially in small districts.
He pointed out that Section 3 changes the required local
contribution from 35 percent to 50 percent which would result in a
10 percent decrease in Valdez's operating budget. Sections 1 and
2 regarding area cost differentials would also have major
consequences for small districts. He did not feel that the
McDowell Study would offer the appropriate numbers to solve the
problem.
TAPE 95-6, SIDE B
Number 578
REYNE BROCKMAN, President of the PTA of Lottie Sparks, reviewed the
growth in enrollment of the school over the past years. She said
that the Lottie Sparks' schools would be in jeopardy if the minimum
enrollment changes to 16. This school is a three hour bus ride
into Glenallen and correspondence is not an option for most
families. She emphasized that consolidation would not be cost
effective in this district which encompasses 24,000 square miles.
Reducing funding will hurt the needs of smaller rural schools while
benefitting the larger schools. She concluded that the social,
economical, and educational effects of closing these smaller
schools would be devastating for those communities.
BOB HARTY, Interim Superintendent for the North Slope, expressed
concern with the change in the required local support and the
change from the area cost differential to the school price index.
He indicated that the price index's calculation by the Department
of Education seems to place greater restrictions on small rural
areas while benefitting the urban areas. He opposed SB 70 as it is
currently written as an unequitable burden on the North Slope
Borough.
PATTY GRAVES, Cordova School District, felt that SB 70 place rural
areas at a disadvantage. In rural areas, the cost of education is
usually higher and there is a limited tax base from which to draw
revenue. She pointed out that urban areas such as Anchorage could
have a sales tax and draw revenue from visitors while rural
communities with a sales tax, like Cordova, have limited access to
outside revenue. She expressed concern with the minimum enrollment
requirement change. She pointed out that Section 5 seems to
contain a set amount of money which would not change even in the
face of increased educational costs. Therefore, districts will
receive less money. She supported the single site portion of
SB 70.
CHRIS CAMPBELL, parent and member of the Valley Park Elementary
School PTA Legislative Committee, stated that SB 70 is a good
beginning to providing funds to the school districts. She
reiterated the need to address an inflation adjustment and local
match in SB 70. She was astonished that Valley Park receives the
lowest amount of funding in the state.
Number 512
NICK FITZGERALD, teacher and parent in Ketchikan, stated that
budget cuts tear communities apart. He commented that the school
price index needs to be a mathematical calculation not a political
tool. He reiterated the budget cuts facing Ketchikan; they will
cut about 16 teachers. SB 70 is a start.
JOHN ANTONNEN, Executive Director of the Southeast Regional
Resource Center, reiterated Mr. Harry Roger's sentiment that the
problem with the foundation funding formula is that equity is in
the eye of the beholder. He suggested increasing the unit value,
the inflationary cost in education, while attempting to find a
venue out of this inequitable funding formula. He supported the
single site revisions in SB 70. He felt that the price index with
its winners and losers is somewhat better than the area cost
differential. The winners and losers of the price index could
create resistance to changing the formula. He indicated the need
for relief from the 19 percent cap. This relief from the U.S.
Department of Education could happen if Alaska attempts to rewrite
the formula. He urged reviewing the increase in the instructional
unit value because it would increase funding for every district in
the state.
GEORGE MAYKOWSKI pointed out that seasonal employees like those in
his district move about and the school system is set up to
accommodate that movement. These type of districts would not
benefit from the change in the date of the count of students. He
suggested having an earlier date or having two dates and averaging
the student counts in order to receive a true estimate of
enrollment.
JERRY BURNETT explained that Section 11 of SB 70 allows the
Commissioner to permit district's having a different period in
which to report the counts for average daily membership. GEORGE
MAYKOWSKI expressed the need for more work on this and offered his
services.
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